The New Classical View of Fiscal Policy Holds That

question 90

Multiple Choice

The new classical view of fiscal policy holds that

• A)budget deficits will stimulate consumption.
• B)budget deficits will decrease the saving rate.
• C)individuals fail to recognize that debt-financing implies higher future taxes.
• D)individuals fully anticipate the added tax liability implied by the debt financing and will increase their saving so they can meet this obligation.